As part of the Tax Strategy Group Papers published on 16th September by the Department of Finance, a number of insights with respect to how the new Digital Gaming Tax Credit may operate, when made available.
The purpose of this credit is to improve Ireland’s performance in the sector, as it is acknowledged by Government that we are significantly behind global peers in terms of employment growth in this sector.
Some of the main insights include:
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The credit will likely be subject to a certification process, similar in nature to that required for the in-situ Film Tax Credit.
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The relief will likely be provided in the form of a refundable corporation tax credit, i.e. applicable to companies and not to individuals or sole traders.
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It is expected that the definition of a digital game development effort will include the design, production and testing of digital games.
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It is likely that exclusions around certain types of development efforts will be applied. By way of example, areas such as advertising and gambling have been explicitly excluded in other jurisdictions.
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Consideration is being given to whether minimum and maximum eligible expenditure thresholds will be applied. The purported purpose of the minimum threshold being to ensure the objective of attaining increased employment is achieved, while the maximum threshold allows for an element of cost control on behalf of the Exchequer.
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The claims process is being considered by reference to either an annual claim process or a claim on completion of the project. The international comparisons typically show an annual claim approach, which would assist with cash flow for smaller companies.
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While the actual credit rate has not been discussed it has been confirmed that the credit will require European Commission approval, so the date when this credit will become operational is as yet unknown.
The full paper can be found under the ‘TSG 21-05 Corporation Tax’ publication here.
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